Shares Skyrocket On China Train Firms Mega Merger

Chinese listed shares of the world’s largest train makers skyrocketed on Wednesday after the firms announced plans to merge.China CNR and CSR said they would merge to create a $26bn (£16.7bn) firm to compete with giants like Canada’s Bombardier and Germany’s Siemens.

Shares of CNR jumped over 44% in Hong Kong, while its Shanghai stocks were up at the daily limit of 10% on Wednesday.

CSR shares were also up over 32% and 10% in both indexes respectively.

The companies shares surged despite a private survey that showed manufacturing data in the world’s second largest economy had contracted for the first time in seven months in December.

Their shares had been halted from trade on 27 October and a statement was issued about trading resuming on 31 December.

State-owned giants

Both state-owned firms are the biggest of its kind in the world because of booming domestic sales.

The new company would have a combined annual revenue of about $32.7bn based on 2013 statistics, compared with Siemens’ $96.5bn and Bombardier’s $18.2bn revenues last year, according to Reuters.

The merger would help them compete for global rail deals, the companies said in a joint statement on Tuesday.

“The merger is expected to improve efficiency in the use of resources, effectively reduce operating costs and realize the internationalization strategy, thereby promoting competition globally,” it said.

In October, CNR gained global attention after it was awarded a deal to supply trains to major US city Boston.

CSR, meanwhile, was a part of a consortium that got a $3.75bn high-speed railway contract from Mexico in November, but that was cancelled over controversy in the bidding process.

The merger still requires approval by shareholders and Chinese authorities.